Effects of lower income cap expected sligght in Idaho
By Carol Ryan Dumas, Ag Weekly editor
Friday, August 3, 2007 1:44 PM CDT
TWIN FALLS, Idaho Fueled by a growing urban public and international trade disputes, farm subsidies have been one of the hottest topics surrounding the 2007 Farm Bill being volleyed about Congress. With the passage of it bill on July 27, the House would further limit eligibility for conservation and farm-program payments.
Under the Committee’s version of the farm bill, growers with an adjusted gross income or net taxable income of more than $1 million would not be eligible for government payments. That eligibility cap was cut by $1.5 million from the former $2.5 million in adjusted gross income.
How many Idaho farmers that would affect was a question Idaho’s congressional delegation couldn’t answer.
“Basically, we haven’t qualified yet how many farmers would be impacted by the cap,” said Dan Whiting, Senator Larry Craig’s communications director. “It obviously would affect some producers in Idaho.”
Senator Craig is pleased that the cap was not set at the $200,000 level, as proposed by the administration, he added.
Whiting said the cap would have a bigger effect on farmers in the South, such as cotton and peanut farmers who get more of the subsidy share.
Ron Abbott, Idaho farm programs chief with the Farm Service Agency in Boise, expects the number of Idaho farmers affected will be low. He reviews forms and taxes regularly and is quite familiar with farmers’ adjusted gross income.
“With the numbers that we review, that AGI is a negative number. Gross income may be high, but that AGI is way down,” he said.
“It’s not uncommon, literally, if you generate $1 million, you’ll spend $900,000 to $950,000 generating that. Profit in farming is about 2 to 3 percent; it’s a very narrow margin. Their expenses are just outrageous,” he said.
That’s why he doesn’t expect many Gem State farmers will be affected by the lower cap.
To try to put things in perspective, the 2002 Census of Agriculture with the last available stats reports the number of Idaho farms with more than $1 million of market value of products sold -the closest thing to gross income was 689 out of about 25,000 farms. Of that, the number with gross sales over $2.5 million was 156.
But that’s gross income, which can be a long way from adjusted gross income, Abbott said.
Brad Early, statistician with The USDA’s National Agricultural Statistics Service in Boise said breaking down net cash farm income for this purpose is difficult. In that same 2002 Census, the number of farms with net cash income over $50,000 (the highest level surveyed) was 2,695.
Duane Grant, who farms with 4-D Farms near Rupert, said the lower cap is not going to affect a large number of Idaho farmers, but the implications are significant.
“I would suspect as high as a half a dozen dairy operators in the valley that would be affected; and that’s significant, they grow a lot of corn,” he said. “But once you move outside of the dairy industry in the valley and look at crop producers, I would doubt there’d be any that get picked off.
Grant said farmers tie up so much cash in production such as land and equipment that most would have an adjusted gross income below the new cap.
The bigger issue, he said, is that the farm bill is moving away from what it has been a contract between the American public and farmers.
“It was an agreement that in return for farm programs, farmers promise to maintain a very adequate, high-quality, low-cost food supply,” he said. “Now, it’s being painted instead with a social-welfare brush, and that’s not what it is.”
And this 65 percent reduction in the eligibility cap is unsettling proof of that.
Statewide, Grant said, the cap might pick off one or two row-crop producers.
“But if they reduce it by 65 percent the next go round, it’ll pick off 100 percent of our commercial farms,” he added.
For now, farm programs still have strong backing in farm states.
Lindsay Nothern, communications director for Senator Mike Crapo said the Senate Committee and Crapo “obviously remain very committed to the subsidy program.”
“If the question is: Will the Senate follow what the House has done?” Nothern posed, “the answer is: not necessarily.”
A mark-up date of the farm bill hasn’t yet been set in the Senate, he added.
And “I am not aware of a large extent of discussion on terms of that reform that was done in the House,” he said.
Wayne Hoffman, Idaho Congressman Bill Sali’s communications director, said a lot remains to be seen on lowering the cap on eligibility.
This is a moving target,” he said. “The Senate is still working on its version of the bill.”
Nonetheless, “we’re looking into what impact this will have with Idaho farmers. Any time you start playing with a cap, there are concerns,” he said.
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